Key Takeaways:
- While luxury thrives on a delicate balance of pricing, desirability, craft, creativity, and storytelling, antitrust scrutiny spilling over from the pushback against big tech is alleging that this equation has become imbalanced.
- Generative video model Sora has been put in the hands of the creative community, across film, music, art, and fashion. Deep concerns remain around accuracy, consistency, and copyright, but unlike the prompt tests released so far, these new showcases reveal what the model is capable of when it’s given to talented designers, artists, and editors.
Hermès and Gucci grapple with the turbulent luxury market
Hermès, the luxury French fashion house, is in hot water this week. In a new Californian class-action lawsuit, the brand is accused of engaging in unlawful “tying” – specifically holding back their Birkin bag for all but the highest-spending customers, who are allegedly required to buy ancillary items from other product categories before being offered the coveted bag. This, the plaintiffs argue, violates antitrust law, which is an exceptionally hot topic at the moment across technology.
The Birkin bag, famously named after the singer and actress Jane Birkin, has come to stand as the epitome of luxury and exclusivity. With a price tag starting at $10,000 for a new item, and vintage pieces commanding prices as high as $450,000 at auctions, it has become a sought-after status symbol. But you won’t find these bags available for purchase online or even in-store. They are often kept out of sight, with some customers enduring a wait spanning several years to own one. It’s the same story with Hermès’s Kelly bag (after Grace Kelly.)
The outcome of this litigation will be of particular interest to Rolex (who has been accused of requiring shoppers to buy from sister brand Tudor before being allowed to buy Rolex products, reports BoF) and, for that matter, all luxury brands that either openly or covertly link access to their most desired items with the purchase of less exclusive, unrelated products as part of a loyalty model.
The lawsuit against Hermès is part of the heightened scrutiny luxury brands face around their pricing and sales tactics, particularly as price hikes have become more common and substantial recently. In just one instance, during the pandemic, Chanel nearly doubled the prices of certain handbags, and although various publications have recently written about the dual challenge of excess inventory and high return rates, luxury is the one segment where discounting is seen as an absolute last resort.
It’s true, of course, that luxury fashion has always been associated with hefty price tags. Hence the name. But despite brands and retailers blaming price surges on inflationary pressures and supply-side cost increases, it seems that in some cases the price hikes serve more as a strategic move than a direct response to economic factors.
Put simply, the Hermès lawsuit has opened up a path into consumers scrutinising the fairness and legality of strategies aimed at preserving the exclusivity and desirability of luxury items. The luxury fashion sector will need to reevaluate its approach to it, without crossing into exclusivism. And to be clear, this exclusivity is reserved for a small percentage of shoppers, as the top 5% of luxury clients are responsible for 40% of luxury sales.
Also trying to steer its ship to success – without using allegedly unlawful practices, that is – is fashion group Kering, whose shares plummeted following reports indicating an anticipated 20% decline in Gucci sales for Q1 2024. The forecast then led to a staggering $7 billion decrease in the company’s market capitalisation. Kering has faced additional hurdles with dwindling sales at brands such as YSL and Balenciaga with the corporation recently disclosing a 6% reduction in Q4 2023 revenue.
Kering has blamed the most recent decline on slumping sales in the Asia-Pacific region, despite efforts to “revitalise” the Gucci brand, leveraging its legacy of craftsmanship, Italian heritage, and its modernity. The profit warning will likely prompt renewed speculation over how Kering might lessen its reliance on Gucci – known for flamboyant designs that are out of step with the current trend toward understatement (which is a pity as many top brands’ designs seem to be veering towards homogeneity.)
True luxury transcends mere brand names and price tags. It encompasses exceptional craftsmanship, distinctiveness, durability, impeccable quality, and ethical practices throughout the business. These are elements that the segment has traditionally balanced well, but this week’s news suggests that the delicate balance between these variables has been disrupted, and the sector is likely to be turning to process change and enterprise technology to find equilibrium again.
Sora gets praise from the creative community, but concerns remain
OpenAI has an update for us on Sora – their text-to-video AI generator that we wrote about last month upon its announcement.
In a blog post published this week, OpenAI lets us know that they have “been working with visual artists, designers, creative directors and filmmakers to learn how Sora might aid in their creative process.” Among the cohort whose projects have now been announced was at least one digital fashion designer.
Opinions on generative AI span a wide spectrum: from excitement about its creative possibilities, to fears of creatives’ work being misappropriated for AI training. Many are afraid that AI will be snatching jobs up, leaving humans in the lurch. And to be honest, the first videos created using Sora are compelling enough at first glance that there definitely is reason to be both optimistic and afraid of generative AI’s potential.
To help quell this fear. OpenAI has granted artists and filmmakers early access to Sora as a way of demonstrating what generative video can achieve in the right hands.
“The ability to rapidly conceptualise at such a high level of quality is not only challenging my creative process but also helping me evolve in storytelling,” said Josephine Miller, creative director of London-based Oraar Studio, which specialises in 3D visuals, augmented reality and digital fashion. In Miller’s short film, viewers are immersed in a fantastical underwater world where individuals glide about in clothing adorned with shimmering, fish-like scales. Like several other films showcased by OpenAI recently, this cinematic experience blurs the line between the tangible world and boundless creativity. “Sora has opened up the potential to bring to life ideas I’ve had for years, ideas that were previously technically impossible,” Miller adds.
Once Sora becomes accessible to everyone, it’s anticipated that it will have the capacity to translate creative visions with an extremely low skill floor, although this week’s demonstrations show that pre-existing creative talent, aesthetic sensibilities, and a knowledge of when to edit will still be important to realising compelling results. . And when those capabilities are combined, designers who do not necessarily know how to model, stage, and render in 3D – or who don’t have physical prototypes to use to shoot video – will be able to quickly iterate on their ideas, exploring different styles, fabrics, and silhouettes – in motion – in a fraction of the time it would take with traditional methods.
As this all plays out, it’s possible that Sora will push brands and retailers even further in the direction of favouring video content and real-time experiences. For today’s audiences and consumers, video content is 12 times more successful than other types of content, with higher engagement rates than text and image content combined. With Sora (assuminng it arrives accompanied with some kind of equivalent to ControlNet to keep things on-model), brands may be able to easily create engaging content for marketing campaigns, social media channels, and e-commerce platforms; instead of relying solely on static images or costly photoshoots. Co-Founder of Native Foreign Nik Kleverov agrees, having used Sora “to visualise concepts and rapidly iterate on creative for brand partners.” An exciting indication that budgetary restraints no longer have to entirely shape the narrative of creativity.
And one of the biggest opportunities could be when it comes to 3D. Even those with advanced technical ability in this area found Sora useful, with the tool allowing them to overcome “technical hurdles” and get to “pure creativity” sooner also opening up a world of “instant visualisation and rapid prototyping.” This, for fashion, could be a massive unlock and a massive shock – either streamlining process
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